Decomposing Welfare Changes in GTAP
AbstractThis paper develops a complete decomposition of the change in global welfare in the GTAP Model. In particular, this money metric change is broken down into component parts, each of which relates to a quantity change interacting with a distortion in the model. This enables the user to assess, for example, how much of the gains from trade reform are attributable to a given commodity and/or a given region. The commodity and region specific changes in allocative efficiency can be further decomposed by transaction/tax instrument. We find that this greatly facilitates the presentation and analysis of results from GTAP. We motivate the derivation of this decomposition with the case of a one region, three commodity, analogue to the GTAP Model. This permits us to focus on purely allocative efficiency effects (no terms of the trade changes). Extension to the multiregion model adds the prospect of terms of trade effects on regional EV, and the multiregion decomposition isolates the contribution of tradable price changes to regional welfare. This is demonstrated in a 3 region, 3 commodity example. Finally, we offer a more complete decomposition which takes into account the impact of changes in endowments and technology on regional welfare. This revised (2001) version introduces a number of important changes to the original (1996) paper. In particular, we build on the new final demand structure for GTAP proposed by McDougall (2001). This includes explicit recognition of changes in the marginal utility of income, as well as a per capita decomposition. We also take account of version 5.0 changes in the standard GTAP Model, including the introduction of multiple international margins commodities.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University in its series GTAP Technical Papers with number 308.
Date of creation: 2001
Date of revision:
Note: GTAP Technical Paper No. 05
Contact details of provider:
Postal: 1145 Krannert Building, West Lafayette, IN 47907-1145
Phone: (765) 494-4267
Fax: 765 494-9176
Web page: http://www.gtap.agecon.purdue.edu/
More information through EDIRC
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jeremy Douglas).
If references are entirely missing, you can add them using this form.